reducing your exposure to pay discrimination claims: how employers doing business in the u.s. should...

Reducing Your Exposure to Pay Discrimination Claims: How

Employers Doing Business in the U.S. Should Respond to the

Lilly Ledbetter Fair Pay Act

If you are experiencing any other technical difficulty, please contact Technical Support toll-free at 1-866-229-3239, Option #1.

The Event Code is 662 889 709.

1© Employment Law Alliance

Presenters

Moderator – Sheldon N. Sandler, Young Conaway Stargatt & Taylor, LLP, Wilmington, [email protected] Louis P. DiLorenzo, Bond, Schoeneck and King, PLLC, Syracuse, [email protected] Michael S. Glassman, Dinsmore & Shohl, Cincinnati, [email protected] Adin C. Goldberg, Day Pitney LLP, Florham Park, NJ and New Haven, [email protected] Charles O. Lentz, Gray Plant Mooty, Minneapolis, [email protected] Elizabeth Torphy-Donzella, Shawe Rosenthal LLP, Baltimore, [email protected]

2

© Employment Law Alliance

mailto:[email protected]






Hypothetical

Barack Obama signs the Lilly Ledbetter Fair Pay Act on January 29, 2009, and the next day, 7 female employees of Megabank Company, a financial services firm, visit the HR office together. They complain that they believe their pay has been depressed by discrimination (gender as to all; race or national origin in addition as to some). In support of this, they identify the following:


Hypothetical

• Between 1995 and 2000 they reported to Alex, a white male supervisor whom they claim was biased against women and minorities. They base this primarily on his lukewarm evaluations of their performance and meager raises. They also base this on the fact that Alex was the subject of a gender discrimination lawsuit that the company settled.

• One of the 7 (June) competed with Alex for the supervisor’s job. They think Alex got the job (and a big raise) because he was a golf buddy of the selecting official (Ted, also white male, now deceased).

• They believe their male counterparts earn more than they do (although they do not have access to that information).

• They cite Bureau of Labor statistics figures showing women in the financial services industry on average earn only 55.2 % of what their male counterparts earn. BLS data shows varying disparities for females across the board.


Ledbetter vs. Goodyear Rubber and Tire Company and the Scope of the Lilly

Ledbetter Fair Pay Act

Michael S. Glassman


Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007)

Facts:

• Lilly Ledbetter was a supervisor at Goodyear’s plant in Gadsden, Alabama from 1979 until her retirement in 1998.

• Ledbetter’s salary was determined annually primarily based on her supervisor’s relative ranking of her performance.

• Ledbetter’s reviews generally placed her at or near the bottom of her male co-workers in terms of performance. Consequently, each year she received relatively small salary

increases, if any increase at all. • By the time Ledbetter retired effective November 1, 1998, her

relatively small pay increases left a large gap between her compensation and that of her male co-workers.



Procedural Background:

• In March 1998, Ledbetter filed a questionnaire with the EEOC alleging sex discrimination with respect to a new position into which she claimed she had been forced. In July 1998, Ledbetter filed a formal charge with the EEOC alleging sex discrimination, including a claim based on her lower pay as a supervisor. Ledbetter thereafter filed suit in the Northern District of Alabama.

• A jury returned a verdict for $223,776 in back pay, $4,662 in mental anguish, and $3,285,979 in punitive damages.

• Goodyear then moved for a judgment notwithstanding the verdict, stating that her claim was time barred, which the district court denied.

• The Eleventh Circuit, however, reversed the district court’s ruling on Goodyear’s motion for judgment notwithstanding the verdict, determining that the charge was, in fact, time barred.

• Ledbetter appealed to the United States Supreme Court.7


• ISSUE: Was Ledbetter’s Claim Timely?

• The U.S. Supreme Court said: NO.



The Supreme Court held that the time period for filing an EEOC charge begins when the allegedly discriminatory pay decision occurs.

• Accordingly, Ledbetter’s EEOC charge was untimely.

• In order for a plaintiff to recover, she had to show that a pay decision within the charge filing period was discriminatory.

• Ledbetter should have filed her charge within 180 days after the initial allegedly discriminatory pay decision was made and communicated to her.

• The later effects of past discrimination do not restart the clock for filing an EEOC charge.


The Lilly Ledbetter Fair Pay Act

BUT…• On January 22, 2009, the Senate approved the

Lilly Ledbetter Fair Pay Act. • The House of Representatives approved it five

days later.• On January 29, 2009, President Obama signed the

Lilly Ledbetter Fair Pay Act of 2009, which was the first bill signed into law by the new administration.

• This Act expressly overturned the Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Co.



• The Act amends Title VII, the ADEA, the ADA, and the Rehabilitation Act to clarify that a discriminatory pay decision occurs each time compensation is paid pursuant to the discriminatory pay decision.

• The Act expands the statute of limitations and makes it easier for employees to sue their employer for alleged discrimination in the provision of pay, benefits, or other compensation based on characteristics such as gender, race, age, religion, or disability.• The applicable statue of limitations (180 or 300 days) is

essentially re-started with each paycheck that reflects a discriminatory pay decision.



Accordingly, under the Ledbetter Act, discrimination with respect to pay, benefits, and other forms of compensation now can occur when:

• A discriminatory compensation decision or other practice is adopted; or

• When a person becomes subject to a discriminatory compensation decision or other practice; or

• When a person is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid (the “paycheck rule”), resulting in whole or in part from such a decision or other practice.



• Notably, the law applies to all “persons” who are affected by the discriminatory pay decision.

• Query: Does this mean that the law can be interpreted to include non-employees, such as spouses of deceased workers, which could increase the statute of limitations almost indefinitely?

• The law went into effect retroactively to May 28, 2007 and applies to all pay discrimination claims pending on or after that date.

• Despite the ability to rely on an old decision if it is affecting current pay, back pay period still is limited to two years before the date the charge was filed.


Damages and Defenses after Ledbetter

Charles O. Lentz


Damages

No Change In Computation of Damages

• Back pay limited to period starting two years prior to filing of Charge

• Compensatory damages unaffected• Front pay calculations unchanged• Damages under Equal Pay Act unaffected


Damages

Awards To Compensate for Pension/ Retirement Benefits Impacted By Discrimination

•Present day value of discriminatory deficiency is recoverable.•Timeliness of claims related to pension benefits is unchanged.


Damages

Extent of Exposure/Risk• Single plaintiff cases• Multiple plaintiff cases• Collective/Class action cases

Effect of “Corrective Action” Pay Adjustments• Impact on damage claims• Impact on defense arguments/case presentation


Defenses

Look Closely at Available “Timeliness” Defenses• Application of “other practices” language by the

courts• Consider whether prior “discrete” discrimination

may still be time barred

Consider Application of Equitable Defenses• Laches• Waiver• Equitable estoppel


Defending a Pay Discrimination Case

The Size of the Fight/Cost of Defense

• Single plaintiff case• Multiple plaintiff case• Collective/Class action case



Unique Problems Flowing From “Paycheck Accrual” Doctrine

•Old decisions need to be described in detail - What was decided

- Why the decision was made

•Difficulties describing individual compensation decisions



• Difficulties describing compensation program design.

• Not all witnesses will be available.

• Not all witnesses will be friendly.

• If documentation exists, it will be incomplete.



Importance of Statistical Evidence

• Existence of pay disparities

• May shed light on otherwise opaque/distant decisions

• Will vary depending on nature of the case

- Disparate treatment

- Pattern and practice

- Disparate impact


Taking Stock after Ledbetter: Pay Audits

Adin C. Goldberg


Conducting Pay Audits: Purposes

• Uncover potential problems caused by prior compensation decisions or practices.

• Identify deficiencies or problems in your current salary administration process.

• Address and correct problems to avoid legal claims and ensure pay equity.

• Implement steps to ensure lawful salary administration program.

• For federal government contractors and subcontractors, affirmative action compliance (OFCCP regulations).


Protecting the Audit from Disclosure

• Attorney-Client Privilege: critical that steps be taken to maximize the likelihood that the audit will be protected from disclosure.

• Audits should be conducted under the supervision of legal counsel.

• Legal counsel should direct and oversee the gathering of relevant documents, the steps taken during the audit process, the statistical analyses conducted, and all communications should be directed to counsel and marked privileged.

• Limit internal discussions and disclosure of audit process and the results.

• Carefully draft written audit findings/results/ recommendations.


Scope of Audit

• Review all written and “unwritten” policies and practices relating to pay, including setting starting pay levels, promotional pay increases, performance evaluations, and merit pay increases.

• Review should include salary grade/band structures, performance evaluation documents, written criteria affecting merit increases, and bonus and commission arrangements.

• Identify the factors that influence compensation, both in terms of written policy and actual practice.

• Identify whether relevant factors are used across the organization, or do they differ by location, department/ division, or other unit.


Scope of Audit

• Conduct statistical analyses by job titles, pay grade/band, type of work performed, and level of responsibility, focusing on gender and race/ethnic classifications, to identify whether disparities exist.

• Consider retaining qualified statisticians (under the direction of legal counsel) to perform statistical analyses.

• Where disparities are noted among current employees, individually or on a larger scale, examine histories of pay decisions to identify the underlying reasons for such differences.


Scope of Audit

• Investigating the history of past pay decisions requires: • a review of all relevant documents, including

performance evaluations, disciplinary and attendance records, production and job performance data.

• interviews with supervisors or managers involved in such decision making,

• consideration of labor market conditions applicable at relevant times,

• history of salary demands of applicants, and • any negotiations that may have taken place, etc.


Results of Audit

• Where pay disparities exist, particularly those adversely impacting “protected group” members, and where the employer cannot satisfactorily justify or support the disparities, consider appropriate remedial steps.

• Remedial steps may include adjustments on a going-forward basis, as well as settlement of potential past claims.

• Use of well-drafted releases/waivers.


Results of Audit

• Implement appropriate policies and procedures for pay decisions.

• Pay policies should contain specific criteria for managers to follow in setting starting pay levels and recommending pay adjustments for current employees.

• Where performance evaluations are used, require not only numerical ratings but also narrative explanations and discussion– this forces managers to articulate rationale for evaluations, and enables those involved in the oversight process to identify problem areas.


Results of Audit

• Train managers on use of appropriate criteria in setting starting pay, and in recommending or making pay adjustments.

• Establish an oversight process to review recommendations of managers to ensure consistency and compliance with established company policies and criteria.

• Document the rationale and bases for pay decisions, and ensure that document retention policies are followed.


Documentation and Record Keeping

Elizabeth Torphy-Donzella


Documentation:“The Old Days”

• Except as required by law, no overriding imperative to create records.

• Retention periods mostly “driven” by statutory requirements• E.g. three years for many wage records; one year for

most records of personnel actions.• Personnel files – for employees’ tenure + one year.• Differing state requirements.


Caveat on “The Old Days”

• Mandatory or not, juries expect decisions to be documented.• “If it isn’t written, it isn’t true (unless the

plaintiff says it is true).”

• Thus, lawyer’s advice to client generally:• Document performance.• Memorialize decisions in writing.• Retain until any statute of limitations has run.


Post Ledbetter:A New Era

• As explained, challenges are now possible years later.

• Example: June challenging “Dead Ted’s” motives in promoting Alex more than 10 years ago.• Ted cannot shed light.• Documents would be critical.


Documentation Decision Points

• What Records Are Made?• Events to be documented?

• Quality Control in Record Making.• Who makes the record?• Who reviews the record?• Standards for inclusion/exclusion.

• Record Retention.• Period of time?• Form of retention?


What RecordsAre Made?

• Decisions “affecting compensation” department or company-wide• Pay analyses/audits• Job comparison analyses

• As cautioned by Adin Goldberg, do not undertake these unless you plan to take action!

• Proceed with advice of counsel

• Standards of performance, policies on compensation

• Do not overwrite older versions when you update!37


What RecordsAre Made?

• Individual personnel actions:• Selection decisions: maintain files for each

with job description, applicant information (resumes, completed applications), basis for selection and non-selections.

• Performance Evaluation/Salary Adjustment: ensure format captures relevant information and reflects how and why decisions were made.


What about e-mail?

• Constitutes a record, subject to disclosure and use if made and retained.

• Advise managers that e-mail is not the proper medium for discussions about performance, compensation, documenting work expectations.• If the justification for a decision resides in e-

mail, helpful evidence may be “lost in space.”• To retain all forever is impossible.


Quality Control

• Determine what levels of supervision have authority to participate in and document decisions.• Decide what role they play (recommending or

selecting)

• Ensure integrity of process.• Devise selection guidelines.• Train managers in permissible and

impermissible considerations, what to express (and not express) in writing.


Retention of Records

• Time period for retention: past– Driven by type of record and statutory

requirements.– Beyond that, storage considerations,

company philosophy, and the like dictated.

• Advice after Ledbetter (until we see how the cases go):– Retain compensation-related records

indefinitely.41


Form of Retention

• Indefinite retention imperative: electronic record retention systems.• Note electronic recordkeeping requirements.

• E-Sign, UETA.

• Anticipate need that e-documents be “readable” in future.

• For guidance, see DOL OFCCP guidance on parameters for acceptable electronic retention.


Responding to Employee Complaints

Louis P. DiLorenzo



• Develop Internal Procedures• Open Door Policy• Grievance Procedure• Arbitration• Jury Waiver• Agreement for Shorter Statute of Limitations

• Train Supervisors as In-take Agents

• Investigation Claims44



• Notify Insurance Carriers

• Develop a Strategy• Individual v. Class Potential• Likelihood of Success

• Witness, documents, etc.

• Is this the Ditch to Die in?• Prospective Adjustments• Possible Settlement Options


CONCLUSION

Immediately following the webinar, after you disconnect, a survey will automatically appear on your computer screen asking you to evaluate the webinar. We would appreciate you taking a few minutes to complete it so that we can continue to improve the quality and delivery of future ELA-sponsored webinars.

Thank you for attending our webinar. Please visit our website at: www.employmentlawalliance.com for more resources and to

listen to past webinars.


http://www.employmentlawalliance.com/

reducing your exposure to pay discrimination claims: how employers doing business in the u.s. should...

Documents

male coworkers

male counterparts

small pay increases

white male supervisor

goodyear rubber

goodyear tire rubber

tire company

time ledbetter